Producers Lose Great Opportunity

Last week feeders in the south opted for steady money at $111, potentially allowing the packer to get off easy. The north gained momentum trading at $175 dressed. Northern producers held out, not willing to take steady cash until the market forced their hand.

The packer is taking advantage of cheaper-than-expected cattle to extend their inventory. To offset this trend of poor margins in cash trade going forward, the feeder will need to balance the need for higher cash trade, and need to move their volume to out trade the packer.

The feeders have great opportunity to take back a portion of the margin that the packers are making at this time. However, the only way it changes is to put up a good fight and not allow the packer to pad an inventory with cheap cattle.